Cuts to income tax and fuel duty could be announced in the Spring Budget next year as the Conservatives seek to boos their popularity ahead of the General Election. Experts at Hargreaves Lansdown are also predicting Chancellor Jeremy Hunt could announce for help for first-time buyers.
Susannah Streeter, head of money and markets at Hargreaves Lansdown, said: “The date [for the Spring Budget] has been set for March 6, an earlier date in the month than usual – and that’s fuelling speculation that a General Election could come as soon as May.
“Although the latest snapshot of the public finances showed that Government borrowing was higher than expected in November, it’s unlikely to stop the Chancellor pulling a colony of rabbits from his hat.
“The trend of bumper tax receipts continued during the month, and although debt interest payments jumped again, it’s now expected that interest rates will be lower next year than previously forecast due to the struggling economy.”
Predictions for the Spring Budget
Income tax cut
The Chancellor could announce a reduction in the rate of income tax. Sarah Coles, head of personal finance at Hargreaves Lansdown, said: “It’s very possible the Chancellor is keeping this up his sleeve as a late present in March.
“This is an approach that previous chancellors from Nigel Lawson to Ken Clarke have used in the run up to an election, so it wouldn’t be a big surprise.
“A cut in basic rate income tax – say from 20 percent to 19 percent – would put more money in people’s pockets. It would also have a knock-on impact for pension tax relief.”
Fuel duty cut
A recent OBR report found that for the Government to stay within its fiscal rules, the 5p cut in fuel duty would need to be reversed.
Ms Coles warned this would be a blow for drivers as fuel prices are still above pre-pandemic levels. She said: “It would also be a difficult measure to wear politically, because fuel duty has been frozen since 2011, and motorists have come to feel the Treasury is already taking enough of their money at the pumps.
“The Budget coming earlier may mean that the Government takes the opportunity to prevent fuel duty from rising.”
Help for first time buyers
The experts said the Conservatives could introduce more support for first-time buyers in efforts to secure votes from younger Britons.
With borrowing costs soaring and high house prices, the number of first-time mortgages is set to hit a ten-year low next year.
Ms Coles said: “A new version of the Help to Buy scheme may be resurrected or efforts made to enable more potential buyers to access long term mortgages with low deposits, similar to initiatives in the US.”
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